eProcurement Toolkit

What is procurement?

Short answerProcurement is the process by which an organisation gets the goods, services and works it needs from outside suppliers. It covers defining the need, choosing a supplier, agreeing a contract, ordering, receiving and paying.

What does procurement mean?

In everyday English, to procure something means to get it. In an organisation, procurement is the set of activities that turns a need into a good or service delivered by an outside supplier and paid at the agreed price. It starts before any order is placed, when someone decides what is needed and how much can be spent. It ends after the supplier is paid and its performance is recorded.

Is procurement the same as purchasing?

Procurement and purchasing are not the same thing. Purchasing is the transactional part of procurement: raising the requisition (the internal request to buy), issuing the purchase order, receiving the goods and paying the invoice. Procurement is wider. It also includes deciding how to buy a category, that is, a group of similar purchases such as IT hardware or cleaning.

How does procurement work from end to end?

Seen as a whole, procurement is one route with two halves. The first half decides what to buy, from whom and on what terms. The second half orders, receives and pays under those terms, again and again. For example, the first half ends with a contract for office cleaning; the second half then orders, checks and pays for the cleaning each month.

What are the main types of procurement?

Two distinctions come up in almost every procurement discussion: what is being bought, and who is buying.Direct procurementBuying what goes into the products or services an organisation sells: raw materials, components, packaging, subcontracted manufacturing.